Sharp rise in firms benefiting from Shanghai zone
The Shanghai municipal government on Monday released more details regarding the expansion of the China (Shanghai) Pilot Free Trade Zone (FTZ), with the total area of the FTZ having increased to 120.72 square kilometers from the original 28.78 square kilometers.
"Besides the original zone, the FTZ now also covers the Lujiazui Financial District, Jinqiao Development Zone and Zhangjiang High-tech Zone," Sun Jiwei, deputy director of the China (Shanghai) Pilot Free Trade Zone Administration, said at a press conference held by the Shanghai municipal government Monday.
Five bureaus will be set up to govern the FTZ's bonded zone and the Lujiazui, Jinqiao, Zhangjiang and Expo park districts, according to the press conference.
Meanwhile, the FTZ administration and Shanghai Pudong New Area People's Government will be combined together to manage the FTZ, an innovation in government functions that will be helpful in coordinating resources, Sun said during the conference.
The total number of enterprises in the expanded FTZ has reached over 73,900 so far, including over 16,300 foreign companies, Zhu Min, spokesman for the FTZ administration, said at the same press conference.
In the first three months this year, 833 foreign companies were newly added to the original 28.78 square kilometers of the zone, with an average increase of 270 per month, higher than the level of 170 per month last year, Zhu said.
In the original area of the zone, trade and logistics enterprises accounted for around 80 percent of the companies. But after the expansion, the number of firms in finance, advanced manufacturing, and technical research has increased greatly, which is beneficial in improving the industrial structure of the FTZ, according to Zhu.
The next step is for the regulators to deepen reforms in the Shanghai FTZ, as well as promoting the use of successful experiences from the zone in other areas, according to a press release handed out at the conference.
"After the expansion, enterprises within the FTZ will benefit from reforms and innovation, and enterprises in nearby areas can also be influenced positively," Qiang Yongchang, a professor with the School of Economics at Fudan University, told the Global Times Monday.
Companies in the Lujiazui Financial District and Zhangjiang High-tech Zone will benefit from participating in the financial innovations in the FTZ, Qiang noted.
"Enterprises will face more challenges and competition in the future but fair competition is good for the development of companies," Qiang said.
Liu Shengjun, deputy executive director of the CEIBS Lujiazui International Finance Research Center, said there were still some concerns about the FTZ.
"Some enterprises within the FTZ don't feel they have benefitted that much from it as some policies haven't been well implemented. The government still has room to improve the transparency of its governance of the zone, and should be more determined in implementing policies," Liu told the Global Times Monday.
However, "people should not have excessive expectations for the FTZ. It's understandable that the government is cautious about financial innovations within the zone, as they might involve more risks," Liu said.
The government should consider opening up more fields for foreign investment in the FTZ, Liu noted.
China introduced a "negative list" approach for foreign investment in the Shanghai FTZ in September 2013. It allows foreign companies to invest without restrictions in any sector not on the list.
Following the expansion of the FTZ, the regulators will have to deal with more enterprises, so they will need to improve their management, Qiang noted.
Expansion of the Shanghai FTZ was approved by the State Council in December 2014. On April 20, 2015 China announced further guidelines for new FTZs in South China's Guangdong Province, North China's Tianjin Municipality and East China's Fujian Province, along with plans to deepen reforms in the Shanghai FTZ.
